The IRS officially opened up the 2021 tax filing season on January 24, 2022 but has already made statements to congress, and the public, that they expect this season to be just as complicated and aggravating as the last two years. Just what we all wanted to hear, right?
The biggest source of frustrations for taxpayers is going to be, without a doubt, delays in refunds. "Normally" (do people even use that word anymore?) the IRS issues federal refunds within a 21 day window of time. However, the IRS has warned us that taxpayers should expect it to take longer due in part to the agency still having roughly 6 million unprocessed 2020 individual returns as of December 23, 2021, that have errors on the return primarily dealing with the Recovery Rebate Credit amounts.
Additionally, the IRS still is short-staffed and also dealing with Covid-related tax changes such as the third Economic Impact Payment from March of 2021 and the advanced payments of the Child Tax Credit which began in July of 2021. All of which will have to be verified once a return is filed. Good luck trying to call the IRS too. Due to being short-staffed it's estimated that only 1 in 50 calls are being answered.
So what can be done to alleviate some of this? Here are three major steps you can take:
- Last year in July we sent a Power of Attorney Form 2848 to all of our clients encouraging them to sign it and send it back to us. The Power of Attorney gives Matt and Ryan three extremely useful superpowers:
- It allows them to pull transcripts of your account directly from the IRS computer database. This allows them to see any activity on your account such as estimated payments sent to the IRS, stimulus payments received, and advanced child tax credit payments received.
- If a Power of Attorney is on file, if the IRS ever sends you a letter or notice they are also required to send one to us too. Often we receive those notices before clients do. This gives us the opportunity to contact you before you even know there's an issue and proactively advise you on the next steps you need to take.
- If an issue ever escalates to needing to call the IRS, as Enrolled Agents, Matt and Ryan can call on their top secret IRS/Preparer number on your behalf and speak to an IRS agent about your account. Many issues can often be resolved over the phone in a few minutes time.
- If you received the third Economic Impact Payment last year as a result of the American Rescue Plan, up to $1,400 per taxpayer and dependent, then you will be issued a Notice 1444-C that will have the amount that was issued to you. Make sure you have that notice and send it with your tax documents for your appointment. If you don't have your Notice 1444-C there's a few things you can do:
- If we already have your Power of Attorney on file from last year the easiest way is just to tell us and we'll look it up for you. Otherwise...
- Go to www.irs.gov/coronavirus/get-my-payment and click on the "Get My Payment" link in the opening paragraph on the page. This quick form will tell you when your payment was sent to you. Then you should go back through your bank account around that date and look for a deposit amount. Send us a copy of the bank statement showing the deposit.
- Go to www.irs.gov/individuals/get-transcript and click on the "Get Transcript Online" button. If you don't already have an account set up with the IRS you'll need to create a new one. Here's our instructions for doing that...buckle up, it's not easy. Your 2021 account transcript will show the date and amount that you received. Send us a copy of your 2021 account transcript.
- If you received advance payment of the Child Tax Credit at any point from July through December of 2021, you are going to receive a Letter 6419 which is going to show the amount sent to you. Again, make sure you have that letter and send it with your tax documents for your appointment. If you don't have the Letter 6419:
- If we already have your Power of Attorney on file from last year the easiest way is just to tell us and we'll look it up for you. Like we said, it's a very useful thing. IF we don't have it...
- Go to www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021 and click on the "View Payments" button. After you create an account it will let you know what your total payments were. Send us a copy of that information.
Again, just to be clear, if you received the 3rd Economic Impact Payment (Stimulus Payment) AND/OR you received advanced Child Tax Credit Payments, you can expect a delay in refunds if the amounts we enter on the return differ from what the IRS has in their system for you. Please remember to send us the letters and notices with your other tax documents.